Benefits of USDA Home Loans
There are several types of home loans available, and it’s essential you pick the right one for your situation. Choosing the right type of home loan can lead to more affordable monthly payments and lower upfront costs. One type of loan you might be eligible for in the Houston area is a USDA home loan. Below are some benefits of this type of loan.
Competitive Interest Rates
With a USDA loan, you might benefit from competitive interest rates. Because USDA loans are guaranteed by the U.S. government, lenders can offer lower interest rates. While your credit history and the current conditions of the real estate market will play a role in determining your credit score, know you’ll still likely find lower rates using a USDA loan rather than a conventional home loan.
Low Mortgage Insurance
With conventional loans, if you don’t have a 20% down payment, you must pay private mortgage insurance (PMI). Not everyone can afford a 20% down payment, so many borrowers end up paying for PMI, which is an additional charge each month. With a USDA loan, however, you don’t need to pay for PMI. Instead, you pay two fees: an upfront guarantee fee, which is 1% of the total financed amount, and an annual fee, which is 0.35% of the current loan balance.
No Down Payment
One of the biggest advantages of the USDA home loan is you don’t need to make a down payment. This means you can secure 100% financing without having to save up for a down payment. Few zero down payment home loans are available, making USDA home loans very attractive options.
Flexible Eligibility Requirements
Finally, USDA loans have flexible eligibility requirements, making them available to more people. For starters, USDA loans have different credit requirements. While most conventional loans have a minimum credit requirement of 620, to get a good interest rate you’ll need a score closer to 720. USDA loans, however, don’t have minimum credit score requirements. The only exception is you need a minimum score of 640 to use the USDA’s automated underwriting system.
In addition to the lack of a credit score requirement, the USDA considers a large part of the United States to be eligible for a loan. The goal of a USDA loan is to grow the population in nonurban areas. The USDA considers any area with fewer than 35,000 people rural, which is about 97% of the country.
Learn Whether a USDA Home Loan Is Right for You
If you live in the Houston area, and you think a USDA home loan might be right for you, then Supreme Lending of Houston would love to assist. We can help you determine if the area where you want to live is eligible for a USDA home loan. Once you meet that eligibility requirement, we can help you secure your loan. Through Supreme Lending of Houston, you can secure reasonable loan rates on a USDA home loan in just a short amount of time. Contact us today to get started.